KUALA LUMPUR: The FBM KLCI is forging ahead after a six-day rally as a tamer-than-expected US inflation print boosted the likelihood of a Federal Reserve interest rate cut next month.

While the local benchmark index is showing signs of overheating, investors nevertheless bought up the blue chips by 1.17 points to 1,569.07 at the start of Wednesday trading.

TA Securities said the market sentiment remains buoyant over expectations of the lower US lending rate in September. 

However, it cautioned that overbought momentum indicators suggest the local market may be due for a short-term consolidaiton or pause.

“Immediate resistance is revised upwards to 1,610,

the 76.4%FR, while next key hurdle lies at the December 2024 high of 1,644, followed by a stronger resistance at 1,684. Immediate support is also adjusted higher to the 50%FR (1,527) with stronger supports seen at the 38.2%FR (1,490) and the 23.6%FR (1,444),” it said in its review.

Rakuten Trade posed a more bullish outlook on the local index given the relatively low valuations of the stocks.

“Despite the 30 points gain over the past five days, we regard the local bourse’s valuation remains reasonable hence expect more legs for the index towards the 1,600 level,” it said in a note.

Most Asian markets opened higher in Wednesday trading as stocks tracked what economists are calling a possible “Goldilocks” moment in the US market.

The S&P500 and Nasdaq Composite indices closed at fresh record highs overnight with 1.13% and 1.39% increases respectively following the release of slower-than-expected July inflation data. The possibility of a 25 basis points rate cut in September was now raised to 94.3%, according to CME FedWatch Tool.

On Bursa Malaysia, gainers included MPI up 38 sen to RM22.38, Carlsberg jumping 20 sen to RM17.48 and Hong Leong Industries rising 14 sen to RM12.74.

Leading actives were Classita unchanged at 9.5 sen, NexG up one sen to 41 sen and TWL flat at 2.5 sen.